Latest U.S. tariffs won’t affect Apple, but China’s retaliation might

Apple Inc. dodged stinging duties on its smartwatches and wireless earbuds after the U.S. excluded those gadgets from tariffs on $200 billion in Chinese goods, though the tech giant still faces retaliatory measures being weighed by China that could strike iPhone production there.

The trade tensions are rattling companies in a range of industries, but Apple’s heavy dependence on the U.S. and China makes it especially vulnerable as the world’s two largest powers escalate their economic feud. Because Apple AAPL, -2.66%  assembles almost all of its gadgets in China, its watches, AirPods and other devices are vulnerable to the Trump administration’s plans to widen the scope of tariffs on Chinese imports — a risk Apple warned about earlier this month.

That reliance also could make the iPhone and other devices vulnerable if Chinese officials follow through on retaliatory moves to restrict sales of materials, equipment and parts key to U.S. manufacturers — measures The Wall Street Journal on Sunday reported that Beijing is considering.

Also see: Apple stock slips as analysts say iPhone preorders appear stable or down from last year

The timing of the countries’ new measures could be especially bad for Apple, which this week starts shipping two of its three new iPhones and a new smartwatch. Those new devices are expected to help fuel the company’s sales in the final three months of the year, when Christmas shopping helps deliver about one-third of Apple’s annual revenue.

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An expanded version of this report appears on WSJ.com.

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